South Carolina Senate wants accelerated income tax cut while House looks at property tax rebate

COLUMBIA, S.C. (AP) — The South Carolina Senate started debating a budget Tuesday that accelerates a planned income tax cut instead of the House plan to use $500 million to give homeowners a one-time property tax rebate.

Once the spending plan passes the Senate, a group of three House members and three senators — likely including the leaders of each chamber’s budget committee — is going to have to sort out the differences over the next month or so with the tax break and other items in South Carolina’s $15.4 billion spending plan for next budget year.

Republican Senate Finance Committee Chairman Harvey Peeler has called the competing tax breaks a wonderful problem to have in the 2024-25 fiscal year budget, which again left lawmakers with a substantial pot of additional money to spend.

But Peeler has left little doubt he thinks spending $100 million to knock the income tax rate most people pay in the state from 6.3% to 6.2% is the right move, saying it lasts forever compared to a one-year drop in property tax. The state is in the middle of a five-year effort to cut its top income tax rate from 7% to 6%.

The money involved comes from an account meant to provide property tax relief. Sales tax goes into the fund, and a boom in spending during and after the COVID-19 pandemic has left the account flush with cash.

The House budget suggested giving the money back as a property tax rebate. But county officials worry property tax bills will snap back next year and homeowners will be angry at them.

Along with $100 million in income tax cuts, the Senate plan spends the $500 million on roads and bridges, local water and sewer system repairs, and other items.

Another item the budget conference committee will have to resolve is how much of a raise state employees get. The Senate plan would give state employees making less than $50,000 a raise of $1,375 a year. Workers making more than that would get a 2.75% boost in pay. The House plan gives a $1,000 raise to workers making less than $66,667 and a 1.5% raise to those who make more.

Last year, there was a monthlong showdown over the differences in the budget about how much money should be given to start work on a new veterinary school at Clemson University. It led to a tense meeting and accusations of who cared about people and education more before a compromise was reached in early June.

One point both chambers agreed on is raising teacher pay. Both spending plans set aside about $200 million. Every teacher would get a raise and the minimum salary for a starting teacher would be increased to $47,000 a year. The budget also would allow teachers to get a yearly raise for each of their first 28 years instead of their first 23.

Other items in the Senate plan include $36 million to the Department of Juvenile Justice for security and prison improvements, as well as $11 million to put technology to find unauthorized cellphones in maximum security prisons and have providers block those numbers likely being used by inmates.

There is $175 million to finish work on the new school for veterinary medicine at Clemson University and $100 million for a new medical school at the University of South Carolina.

Senators set aside nearly $5 million for a forensic audit and other help to determine where $1.8 billion in a state Treasurer’s Office account came from and where it was supposed to go.

There is $11.5 million to protect the integrity of the 2024 election and $12.5 million to upgrade election systems.

The Senate budget is “balanced not only in arithmetic; it’s balanced on the needs of the state of South Carolina,” Peeler said. “First tax relief, second public education and third infrastructure.”

For the latest news, weather, sports, and streaming video, head to WCBD News 2.